<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
WALGREEN CO.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
WALGREENS LOGO
200 WILMOT ROAD
DEERFIELD, ILLINOIS 60015
November 21, 2000
Dear Walgreens Shareholder:
You are cordially invited to our Annual Shareholders' Meeting on Wednesday,
January 10, 2001, at 2:00 p.m., Central Standard Time. The meeting will be held
in the Grand Ballroom of Navy Pier, 600 East Grand Avenue, Chicago, Illinois. A
trolley service will run from the Navy Pier parking garages to Entrance 2, Lobby
3. Five dollar parking passes will be available at the registration desk.
The year 2001 is a momentous one for Walgreens, marking the 100th
anniversary of our beginning on the South Side of Chicago. There is no question
that our founder, Charles R. Walgreen Sr., was one of the most innovative
retailers of the 20th century. When he died in 1939, he passed on that legacy,
and today Walgreens continues to drive profitability through innovation. We look
forward to sharing our plans for continued success with you at our Annual
Meeting.
As usual, we will offer a sign language interpreter. If you would like to
use this service, please watch for a sign directing you to a special area or
seek assistance from one of our ushers.
We look forward to seeing you January 10. Whether or not you plan to
attend, it is important that you vote your proxy promptly in accordance with the
instructions on the enclosed proxy card.
Thank you for the loyalty you show Walgreens, both as a shareholder and--we
hope!--customer. Our best wishes for a happy holiday season.
Sincerely,
/s/ L. DANIEL JORNDT
L. DANIEL JORNDT
Chairman and CEO
/s/ D. W. BERNAUER
D. W. BERNAUER
President and COO
<PAGE> 3
[WALGREEN CO. LOGO]
200 WILMOT ROAD
DEERFIELD, ILLINOIS 60015
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, JANUARY 10, 2001
TO THE SHAREHOLDERS OF WALGREEN CO.:
The Annual Meeting of Shareholders of WALGREEN CO., an Illinois
corporation, will be held in the Grand Ballroom of Navy Pier, 600 East Grand
Avenue, Chicago, Illinois, on Wednesday, January 10, 2001, at 2:00 P.M. Central
Standard Time. The Annual Meeting is for the following purposes:
(1) To elect ten directors to hold office until the next Annual Meeting of
Shareholders or until their successors are elected and qualified; and
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on November 13, 2000,
are entitled to vote at the meeting.
Shareholders are cordially invited to attend the Annual Meeting. If
attending, you should bring the admission ticket attached to the enclosed proxy.
You may vote your shares by telephone, via the internet or by mail by following
the instructions on your proxy card. If you vote by telephone or via the
internet, you should not return your proxy card. If you choose to vote by mail,
please sign, date and return the proxy card in the envelope provided. The proxy
may be revoked at any time before it is voted at the meeting by submitting
written notice of revocation to the Secretary or by submitting another timely
proxy by telephone, internet or mail. If you are present at the meeting, you may
vote your shares in person and the proxy will not be used. If you hold shares
through a broker or other custodian, please check the voting instructions used
by that broker or custodian.
For further information concerning individuals nominated as directors and
the use of the proxy, you are respectfully urged to read the proxy statement on
the following pages.
The Company's Annual Report to shareholders for fiscal year 2000 is
enclosed with this proxy statement.
By order of the Board of Directors.
Julian A. Oettinger
JULIAN A. OETTINGER
Secretary
November 21, 2000
<PAGE> 4
WALGREEN CO. LOGO
200 WILMOT ROAD
DEERFIELD, ILLINOIS 60015
November 21, 2000
PROXY STATEMENT
This proxy statement is being sent beginning November 21, 2000, in
connection with the solicitation of proxies to be voted at the Annual Meeting of
Shareholders of Walgreen Co. to be held on January 10, 2001, and further to
inform the shareholders concerning the use of the proxy and the business to be
transacted at the meeting.
The enclosed proxy is solicited by the Board of Directors of the Company.
The proxy may be revoked at any time before it is voted by submitting written
notice of revocation to the Secretary of the Company or by submitting another
timely proxy by telephone, internet or mail. The items enumerated herein
constitute the only business that the Board of Directors intends to present or
is informed that others will present at the meeting. The proxy does, however,
confer discretionary authority upon the persons named therein, or their
substitutes, with respect to any other business that may properly come before
the meeting. Shareholders have cumulative voting rights in the election of
directors and one vote per share on all other matters. Only shareholders of
record at the close of business on November 13, 2000, are entitled to notice of,
and to vote at, the meeting. Your vote is confidential and will not be disclosed
to the Company unless required by law or requested by you.
The expenses incurred in connection with the solicitation of proxies will
be borne by the Company. Solicitation will be made by mail, but may also be made
in some cases by telephone or personal call by officers, directors or regular
employees of the Company who will not be specially compensated for such
solicitation. The Company may request brokerage houses and other nominees or
fiduciaries to forward copies of the Company's proxy material and Annual Report
to beneficial owners of stock held in their names, and the Company may reimburse
them for reasonable out-of-pocket expenses incurred in so doing. The Company may
also elect to retain professional solicitors to assist in the solicitation of
proxies. Any professional solicitors will be paid by the Company.
ELECTION OF DIRECTORS
There are ten nominees for election to the Board of Directors. Vernon A.
Brunner is retiring from the Board of Directors and is not standing for
re-election.
In the election of the Board of Directors, shareholders have the right to
vote the number of shares owned by them for each of the ten nominees.
Alternatively, shareholders may cumulate their votes and give ten votes to one
nominee for each share owned, or they may distribute their votes on the same
principal among as many nominees as they choose. Directors are elected by the
votes of a majority of the shares represented in person or by proxy at the
meeting. Withheld votes have the effect of votes against the election of
directors, since there are fewer votes for election. Broker non-votes will not
count as votes. As of the close of business on November 13, 2000, the Company
had 1,013,352,546 shares of Common Stock outstanding.
Proxy votes will be cast for the election of the nominees named below to
hold office for one year or until their successors are elected and qualified.
Should any of such individuals unexpectedly become unavailable for election, the
proxies reserve the right to nominate and vote for such other person as they
shall designate.
<PAGE> 5
The following table sets forth the names, ages, principal occupations and
other information respecting the director nominees:
<TABLE>
<CAPTION>
NAMES AND AGES OF DIRECTOR NOMINEES, PERIOD OF SERVICE
THEIR PRINCIPAL OCCUPATIONS AS DIRECTOR
AND OTHER INFORMATION BEGAN IN
------------------------------------ -----------------
<S> <C> <C>
JORNDT PHOTO L. Daniel Jorndt, 59--Chairman of the Board (since July 1990
1999) and Chief Executive Officer (since January 1998). Mr.
Jorndt was Chief Operating Officer and President from
January 1990 to January 1999.
BERNAUER PHOTO David W. Bernauer, 56--President and Chief Operating 1999
Officer (since January 1999). Mr. Bernauer was Senior Vice
President from July 1996 to January 1999 and Chief
Information Officer from February 1995 to January 1999. Mr.
Bernauer was a Vice President from February 1990 to July
1996.
FOOTE PHOTO William C. Foote, 49--Chairman of the Board, Chief 1997
Executive Officer and President of USG Corporation. Mr.
Foote is also a director of USG Corporation and GATX
Corporation.
HOWARD PHOTO James J. Howard, 65--Chairman of the Board of Xcel Energy 1986
Inc. Mr. Howard is also a director of Xcel Energy Inc.,
Honeywell Inc., Ecolab, Inc., and the Federal Reserve Bank
of Minneapolis.
MCNALLY PHOTO Alan G. McNally, 55--Chairman of the Board (since April 1999
1995) and Chief Executive Officer (since 1993) of Harris
Bank, and Vice Chair of Bank of Montreal (since 1990).
Chairman of the Board (since April 1998) and President
(since 1994) of Bankmont Financial Corporation. Mr. McNally
is also a director of Harris Bankcorp, Inc.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAMES AND AGES OF DIRECTOR NOMINEES, PERIOD OF SERVICE
THEIR PRINCIPAL OCCUPATIONS AS DIRECTOR
AND OTHER INFORMATION BEGAN IN
------------------------------------ -----------------
<S> <C> <C>
REED PHOTO Cordell Reed, 62--Former Senior Vice President of 1994
Commonwealth Edison Co. (retired 1997). Mr. Reed is also a
director of LaSalle Bank N.A. and Underwriters Laboratories
Inc.
SCHWARTZ PHOTO David Y. Schwartz, 59--Independent business advisor and 2000
consultant. Former Partner at Arthur Andersen, LLP (retired
1997). Mr. Schwartz is also a director of Venator Group,
Inc.
SCHWEMM PHOTO John B. Schwemm, 66--Former Chairman and Chief Executive 1985
Officer of R.R. Donnelley & Sons Company. Mr. Schwemm is
also a director of USG Corporation and William Blair Mutual
Funds, Inc.
VON FERSTEL PHOTO Marilou M. von Ferstel, 62--Former Executive Vice President 1987
and General Manager of Ogilvy Adams & Rinehart (retired
1997).
WALGREEN PHOTO Charles R. Walgreen, III, 65--Former Chairman of the Board 1963
(until July 1999) and Chief Executive Officer (until
January 1998).
</TABLE>
3
<PAGE> 7
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met four times and there were 16 meetings of Board
Committees during the 2000 fiscal year. All directors attended more than 75% of
the aggregate of the meetings of the Board of Directors and the Board Committees
on which he or she served.
COMPENSATION OF DIRECTORS
Full-time employees of the Company who serve as Directors receive only
reimbursement of expenses incurred in attending meetings. During fiscal year
2000, Directors who were not employees received a quarterly retainer of $6,375
for Board service, a fee of $1,200 for each Board of Directors and Board
Committee meeting attended, and reimbursement for expenses incurred in
connection with such meetings.
Mr. Walgreen III did not receive Director's fees. He received $491,500 in
consulting fees from the Company during fiscal 2000 pursuant to a Consulting
Agreement entered into prior to his retirement as Chief Executive Officer of the
Company. He also received full-time secretarial support and payment of $30,552
for a company car and country club dues. The Consulting Agreement provides Mr.
Walgreen III with 150% of his base salary in effect at retirement over a
three-year term for consulting services and ends February 27, 2001.
Messrs. Howard and Schwemm, and Ms. von Ferstel participated in unfunded
deferred compensation plans offered prior to 1993 that permitted Directors to
defer a portion of his or her retainer fees. During fiscal 2000, payments were
made to Directors under such plans as follows: Mr. Howard, $15,883 and Mr.
Schwemm, $40,829.
Effective November 1996, the Company established the Walgreen Co.
Nonemployee Director Stock Plan pursuant to which each non-employee Director of
the Company will receive an annual equity grant, the amount of which is subject
to adjustment on an annual basis. In fiscal 2000, each director received a grant
of 2,000 shares (Mr. McNally received a prorated grant of 1,500 shares). During
the term of the Plan, each Director will also receive fifty percent of his or
her quarterly retainer in the form of shares, which may be deferred into stock
units. In addition, a Director may elect to receive all or a portion of the cash
component of his or her quarterly retainer and meeting fees in the form of
deferred stock units or to have such amounts placed in a deferred cash
compensation account. This Plan is a replacement for certain compensation
arrangements for non-employee Directors in effect prior to November 1996, under
the Walgreen Co. Retirement Plan for Outside Directors. That Plan will continue
to apply in the future only with respect to compensation earned by non-employee
Directors for periods of service prior to November 1, 1996. Under the terms of
the Walgreen Co. Retirement Plan for Outside Directors, the annual benefits
payable to a Director for the shorter of (i) the number of years the Director
served as a non-employee member of the Board, or (ii) ten years, were equal to
the sum of 80% of the annual Board retainer in effect on the date of retirement,
plus 4% of the Director's final annual retainer for each year of service as a
non-employee Director in excess of ten years. In no case could the annual
benefit payment exceed 100% of the annual retainer in effect and payable to the
Director on the date of his or her retirement from the Board of Directors.
COMMITTEES
The Board of Directors had standing Executive, Audit, Compensation,
Finance, and Nominating and Governance Committees during fiscal 2000, each of
which is described below.
The Executive Committee met three times during the fiscal year. The
Committee is composed of L. Daniel Jorndt, Chairman; David W. Bernauer; Vernon
A. Brunner; Cordell Reed and John B. Schwemm. During intervals between meetings
of the Board of Directors, the Executive Committee possesses such powers of the
Board of Directors in the management of the business and affairs of the Company
as may be delegated by the Board of Directors, subject to such limitations as
may be imposed by law and the By-Laws of the Company.
The Audit Committee met four times during the fiscal year. The Committee is
composed of John B. Schwemm, Chairman; William C. Foote; David Y. Schwartz and
Marilou M. von Ferstel. Each member of
4
<PAGE> 8
the Committee is independent as defined in the listing standards of the New York
Stock Exchange, on which the Company's common stock is listed. The Committee's
responsibilities include evaluation of significant matters relating to the
financial reporting process and system of internal accounting controls of the
Company and review of the scope and results of the annual audits conducted by
the independent auditor. A complete copy of the Committee's written charter is
included as Appendix A to this Proxy Statement.
The Compensation Committee met four times during the fiscal year. The
Committee is composed of Cordell Reed, Chairman; James J. Howard and John B.
Schwemm. The Committee reviews the Company's remuneration policies and
practices, including executive salaries, compensation and other employee
benefits; and administers the Company's Restricted Performance Share Plan, the
1982 Employees Stock Purchase Plan, the Executive Stock Option Plan, the 1986,
1988, 1992 and 1997 Executive Deferred Compensation/ Capital Accumulation Plans,
the Walgreen Co. Section 162(m) Deferred Compensation Plan and the Walgreen Co.
Nonemployee Director Stock Plan.
The Finance Committee met four times during the fiscal year. The Committee
is composed of David Y. Schwartz, Chairman; David W. Bernauer; L. Daniel Jorndt;
Alan G. McNally; Cordell Reed and Charles R. Walgreen III. The Finance Committee
reviews the financial requirements and practices of the Company and makes
recommendations to the Board of Directors concerning such matters.
The Nominating and Governance Committee met one time during the fiscal
year. The Committee is composed of William C. Foote, Chairman; James J. Howard;
John B. Schwemm and Marilou M. von Ferstel. The Nominating and Governance
Committee considers matters related to corporate governance, develops general
criteria regarding the qualifications and selection of board members and
recommends candidates for election to the Board of Directors. The Nominating and
Governance Committee will consider persons recommended by shareholders for
inclusion as nominees for election to the Board of Directors if the names of
such persons are submitted in writing in a timely manner to the Secretary of the
Company. All recommendations should be accompanied by a complete statement of
such person's qualifications and an indication of the person's willingness to
serve.
SECURITIES OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following tabulation sets forth information as of November 13, 2000,
concerning the ownership of Common Stock by each Director, each of the executive
officers named in the Summary Compensation Table included in this proxy
statement, and all Directors and executive officers as a group. Except as
otherwise noted, the individual named possessed sole voting and investment power
over such shares.
<TABLE>
<CAPTION>
AMOUNT OF SHARES PERCENT OF
NAME OF INDIVIDUAL BENEFICIALLY OWNED CLASS
------------------ ------------------ ----------
<S> <C> <C>
L. Daniel Jorndt........................................... 1,405,605(3)(5)(8) *
David W. Bernauer.......................................... 341,415(3)(4)(8) *
Vernon A. Brunner.......................................... 706,322(3)(8) *
William C. Foote........................................... 11,682(13) *
James J. Howard............................................ 37,072(13) *
Jerome B. Karlin........................................... 196,981(3)(6)(8) *
Alan G. McNally............................................ 10,500(13) *
Cordell Reed............................................... 17,976(13) *
John A. Rubino............................................. 273,421(3)(7)(8) *
David Y. Schwartz.......................................... 4,200(13) *
John B. Schwemm............................................ 43,442(9) *
William A. Shiel........................................... 320,603(3)(8)(10) *
Marilou M. von Ferstel..................................... 22,000(11)(13) *
Charles R. Walgreen III.................................... 4,411,752(1)(2)(8) *
All Directors and executive officers as a group (29
individuals)............................................. 15,131,639(3)(8)(12) 1.49
</TABLE>
------------
* Each individual owns less than 1% of the Company's Common Stock.
5
<PAGE> 9
(1) Included in the table for Mr. Walgreen III are 54,978 shares owned by a
trust in which Mr. Walgreen III has a shared beneficial interest. These
shares are listed pursuant to the requirements of Section 13(d) of the
Securities Exchange Act of 1934.
(2) Does not include 3,019 shares owned by Mr. Walgreen III's wife, 133,072
shares held in trust for her benefit, and 53,441 shares owned by other
family members. These shares are noted pursuant to the requirements of
Section 13(d) of the Securities Exchange Act of 1934 and the definition of
beneficial ownership therein. Mr. Walgreen III disclaims any beneficial
interest in these shares.
(3) Includes shares granted pursuant to the Walgreen Restricted Performance
Share Plan as follows: Mr. Jorndt, 34,773 shares; Mr. Bernauer, 12,790
shares; Mr. Brunner, 15,685 shares; Mr. Karlin, 9,580 shares; Mr. Rubino,
10,559 shares; Mr. Shiel, 10,186 shares; all Directors and executive
officers as a group, 171,789 shares. Each individual possesses sole voting
power with respect to these shares.
(4) Does not include 40,000 shares owned by Mr. Bernauer's wife. Mr. Bernauer
disclaims any beneficial interest in such shares.
(5) Does not include 116,999 shares owned by Mr. Jorndt's wife. Mr. Jorndt
disclaims any beneficial interest in such shares.
(6) Does not include 89,704 shares held by Mr. Karlin's wife as trustee under
the Carol K. Karlin Declaration of Trust. Mr. Karlin disclaims any
beneficial interest in such shares.
(7) Does not include 43,522 shares owned by Mr. Rubino's wife. Mr. Rubino
disclaims any beneficial interest in such shares.
(8) Includes shares of stock that may be acquired within 60 days after November
13, 2000, by exercise of stock options as follows: Mr. Jorndt, 925,818
shares; Mr. Bernauer, 239,722 shares; Mr. Brunner, 436,704 shares; Mr.
Karlin, 124,526 shares; Mr. Rubino, 197,402 shares; Mr. Shiel, 256,496
shares; Mr. Walgreen III, 916,358 shares; all Directors and executive
officers as a group, 4,290,146 shares.
(9) Does not include 4,800 shares owned by Mr. Schwemm's wife. Mr. Schwemm
disclaims any beneficial interest in these shares.
(10) Does not include 15,744 shares owned by Mr. Shiel's wife and 6,120 shares
owned by Mr. Shiel's children. Mr. Shiel disclaims any beneficial interest
in these shares.
(11) Does not include 4,000 shares owned by Ms. von Ferstel's husband and 100
shares for which Ms. von Ferstel is custodian under the Illinois Uniform
Transfer to Minors Act. Ms. von Ferstel disclaims any beneficial interest
in these shares.
(12) Includes 5,057,550 shares held by family members of executive officers or
owned by trusts for which executive officers serve as trustees, the
beneficial ownership of which has been disclaimed by such officers in
reports filed with the Securities and Exchange Commission.
(13) Does not include deferred stock units granted pursuant to the Walgreen Co.
Nonemployee Director Stock Plan as follows: Mr. Foote, 5,936 units; Mr.
Howard, 6,340 units; Mr. McNally, 2,218 units; Mr. Reed, 1,525 units; Mr.
Schwartz, 1,136 units; and Ms. Von Ferstel, 1,525 units.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent (10%) of the Company's Common Stock, to file initial reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Based on a review of the copies of such forms furnished to the Company and
written representations from the Company's executive officers and directors, the
Company believes that all forms were filed in a timely manner during fiscal
2000, except that Mark A. Wagner, Treasurer, timely filed a Form 3, but
inadvertently failed to include an option to purchase 1120 shares held by his
wife, an employee of the Company, which error was corrected in an amended Form
3.
6
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation of the Company's Chairman
and Chief Executive Officer, and the next five most highly compensated executive
officers for the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- ----------------------------------------
AWARDS PAYOUTS
--------------------------- ----------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
COMPEN- STOCK OPTIONS LTIP
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) SATION($) AWARD(S)($)(2) (#) PAYOUTS($)
------------------------------ ---- ------------ ----------- --------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
L. Daniel Jorndt 2000 950,000 543,115 86,513 352,617 155,255 0
Chairman of the Board and 1999 883,333 583,457 133,786 254,986 132,466 0
Chief Executive Officer 1998 806,667 507,379 115,196 215,985 560,370 0
David W. Bernauer 2000 516,667 289,268 28,197 176,276 67,924 0
Chief Operating Officer and 1999 405,668 259,457 29,305 76,076 42,018 0
President 1998 292,000 174,133 28,841 68,879 37,290 0
Vernon A. Brunner 2000 430,750 238,938 73,449 148,792 54,598 0
Executive Vice President 1999 417,000 267,145 102,632 110,688 47,922 0
1998 399,583 243,793 93,300 103,925 57,168 0
Jerome B. Karlin 2000 337,500 184,313 25,435 112,827 41,401 0
Executive Vice President 1999 291,667 182,130 40,037 60,464 28,294 0
1998 240,000 140,463 24,444 57,592 29,494 0
John A. Rubino (4) 2000 322,000 175,233 34,233 100,926 34,716 0
Senior Vice President 1999 309,497 194,224 44,509 73,670 31,896 0
1998 294,500 175,751 37,169 70,064 37,938 0
William A. Shiel 2000 312,333 169,570 35,154 97,146 33,423 0
Senior Vice President 1999 299,167 187,217 50,460 71,264 30,856 0
1998 284,500 169,276 43,527 67,667 36,640 0
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(3)
------------------------------ ------------
<S> <C>
L. Daniel Jorndt 588,341
Chairman of the Board and 536,473
Chief Executive Officer 410,486
David W. Bernauer 258,531
Chief Operating Officer and 177,425
President 143,565
Vernon A. Brunner 250,962
Executive Vice President 252,138
220,595
Jerome B. Karlin 191,147
Executive Vice President 154,959
118,029
John A. Rubino (4) 178,536
Senior Vice President 172,736
139,124
William A. Shiel 165,141
Senior Vice President 157,000
132,014
</TABLE>
------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) All restricted shares reflected in this column were granted as a result of
the attainment of performance goals under the Restricted Performance Share
Plan (a description of the Plan and the performance measures are provided in
the Compensation Committee Report on Executive Compensation). Fifty percent
of the award earned in 2000 is payable in cash (reflected in the All Other
Compensation column), and the remaining fifty percent is payable in
restricted shares. Both the cash and stock awards vest in equal amounts over
a four-year period. The total number of restricted shares and their
aggregate market value at August 31, 2000: Mr. Jorndt, 34,773 shares valued
at $1,143,162; Mr. Bernauer, 12,790 shares valued at $420,471; Mr. Brunner,
15,685 shares valued at $515,644; Mr. Karlin, 9,580 shares valued at $
314,943; Mr. Rubino, 10,559 shares valued at $347,127; and Mr. Shiel, 10,186
shares valued at $334,865. The aggregate market value is based on the fair
market value of Common Stock as of August 31, 2000 of $32.875. Dividends are
paid on the restricted shares in the same amount and at the same time as
dividends paid to all other owners of Common Stock.
(3) Detail of the amounts reported in the All Other Compensation column for 2000
is provided in the table below. Split-dollar life insurance represents the
actuarial value of the benefit to the executive of the current year's
insurance premium paid by the Company in excess of that required to fund the
death benefit under the policy. Cumulative net life insurance premiums paid
are recovered by the Company after retirement.
<TABLE>
<CAPTION>
MR. MR. MR. MR. MR. MR.
ITEM JORNDT BERNAUER BRUNNER KARLIN RUBINO SHIEL
---- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Split-Dollar Life Insurance................... 72,526 25,758 21,720 17,380 15,527 10,358
Above-Market Interest Earned on Deferred
Compensation................................ 50,944 8,194 26,023 12,369 16,480 4,380
Profit-Sharing Retirement Plan................ 8,741 8,741 8,741 8,741 8,741 8,741
Profit-Sharing Restoration Plan............... 207,420 91,460 89,514 73,062 66,602 73,114
Restricted Performance Share Plan Cash
Award....................................... 248,710 124,378 104,964 79,595 71,186 68,548
------- ------- ------- ------- ------- -------
Total................................... 588,341 258,531 250,962 191,147 178,536 165,141
======= ======= ======= ======= ======= =======
</TABLE>
(4) Mr. Rubino retired as an officer of the Company effective May 1, 2000.
7
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding non-qualified
options granted to the named executive officers during the Company's last fiscal
year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------------------------------
% OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR GRANT DATE
OPTIONS EMPLOYEES BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#) IN FISCAL YEAR(1) ($/SH)(2) DATE ($)(3)
---- ----------- ----------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
L. Daniel Jorndt................. 155,255 0.91 23.1875 09/01/09 1,510,563
David W. Bernauer................ 67,924 0.40 23.1875 09/01/09 660,871
Vernon A. Brunner................ 54,598 0.32 23.1875 09/01/09 531,215
Jerome B. Karlin................. 41,401 0.24 23.1875 09/01/09 402,814
John A. Rubino................... 34,716 0.20 23.1875 09/01/09 337,772
William A. Shiel................. 33,423 0.20 23.1875 09/01/09 325,191
</TABLE>
------------
(1) Based on 17,040,383 options granted to all employees. Includes 14,859,275
options granted to all Company employees as of May 11, 2000 pursuant to the
Company's Option 3000 Plan established in connection with the opening of the
Company's 3000th store.
(2) Fair market value on the date of grant. Options are not exercisable until
September 1, 2002.
(3) Present value was determined under the Black-Scholes option pricing model
based on the following weighted average assumptions: volatility of 25.86%,
representing the annual variance in the daily percentage change in the price
of the Company's Common Stock over a seven-year period prior to the date of
grant; a risk-free interest rate of 6.32%, representing the treasury bill
rate for the expected term of the option; an average expected term of 7.0
years; and an annual cash dividend yield of 0.27%. The Company's use of this
model in accordance with rules adopted by the Securities and Exchange
Commission does not constitute an endorsement of the model nor an
acknowledgment that such model can accurately determine the value of
options. The ultimate realizable value of an option will depend on the
market value of the Company's Common Stock on the date of exercise as
compared to the exercise price of the option.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information regarding stock option exercises
by the named executive officers during fiscal 2000, as well as the assumed value
at August 31, 2000, of unexercised options held by such officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT
SHARES YEAR-END (#) FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. Daniel Jorndt....... 0 0 935,216 848,091 26,320,262 13,321,062
David W. Bernauer...... 60,880 1,623,712 202,432 147,232 5,695,048 1,863,044
Vernon A. Brunner...... 197,696 4,910,195 379,536 159,688 10,682,273 2,291,272
Jerome B. Karlin....... 26,048 618,640 136,496 99,189 3,838,590 1,318,626
John A. Rubino......... 34,392 785,105 195,728 104,550 5,508,359 1,507,129
William A. Shiel....... 42,208 1,037,381 249,856 100,919 7,029,076 1,455,243
</TABLE>
------------
(1) Based on the fair market value of Company stock as of August 31, 2000 of
$32.875.
EMPLOYMENT AGREEMENTS
The Company has employment agreements (the "Agreements") with the persons
named in the Summary Compensation Table and other key employees of the Company
that become effective only upon a Change of Control (as defined in the
Agreements).
In the event that an employee is dismissed without Cause or resigns for
Good Reason (as such terms are defined in the Agreements), he or she will be
entitled to all accrued but unpaid compensation and benefits and a lump sum cash
payment consisting of the employee's base salary through the date of
termination, a proportionate bonus based upon the employee's annual bonus
pursuant to the Management Incentive Plan for the last three fiscal years, the
sum of the base salary plus bonus that the employee would be entitled to for the
remainder of the employment period under the Agreement, unpaid deferred
compensation and vacation pay, and the difference between the actuarial
equivalent of the retirement benefit the employee would receive if the employee
remained employed for the employment period and the actuarial equivalent of the
employee's actual retirement benefits. In addition, for the remainder of the
employment period, the employee is entitled to continued employee welfare
benefits. The termination of employment of any of these individuals during the
thirty-day period following the first anniversary of the effective date shall be
deemed to be for Good Reason.
The Agreement between the Company and Mr. Jorndt also provides that, in
addition to the three-year term of employment described therein, upon
termination of his employment, the Company will enter into a consulting
agreement, consistent with the Company's past practice, providing him with one
year's base salary over a three-year term for consulting services.
The Compensation Committee Report on Executive Compensation and the
performance graph that follows shall not be deemed to be incorporated by
reference into any filing made by the Company under the Securities Act of 1933
or the Securities Exchange Act of 1934, notwithstanding any general statement
contained in any such filing incorporating this proxy statement by reference,
except to the extent the Company incorporates such Report and graph by specific
reference.
9
<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report describes the Company's executive compensation program and the
basis on which fiscal year 2000 compensation determinations were made by the
Committee with respect to the executive officers of the Company, including the
Chief Executive Officer and the other executive officers named in the
compensation tables in this proxy statement. The Committee establishes all
components of executive pay and recommends or reports its decisions to the Board
of Directors for approval.
To ensure the program is administered in an objective manner, the Committee
is comprised entirely of independent directors. Further, Committee members have
no "interlocking" relationships as defined by the Securities and Exchange
Commission.
The duties of the Committee include recommending to the Board of Directors
the base salary levels for all executive officers as well as the design of
awards in connection with all other elements of the executive pay program. The
Committee further evaluates executive performance and addresses other matters
related to executive compensation.
COMPENSATION POLICY AND OVERALL OBJECTIVES
In developing recommendations regarding the amount and composition of
executive compensation, the Committee's goal is to provide a compensation
package that will enable the Company to attract and retain talented executives,
reward outstanding performance and link the interests of the Company's
executives to the interests of the Company's shareholders. In determining actual
compensation levels, the Committee considers all elements of the program in
total rather than any one element in isolation.
The Committee members believe that each element of the compensation program
should target compensation levels at rates that take into account current market
practices. Offering market-comparable pay opportunities allows the Company to
maintain a stable, successful management team.
Competitive market data is provided by an outside compensation consultant.
The data provided compares the Company's compensation practices to those of a
group of comparator companies. The Company's market for compensation comparison
purposes is comprised of a group of companies that have business operations in
the retail drug industry, as well as companies having operations within broader
retail and wholesale industries. In addition, the Committee considers companies
that have similar sales volumes, market capitalizations and employment levels.
In establishing a comparator group for compensation purposes, the Committee
neither bases its decisions on quantitative relative weights of various factors,
nor follows mathematical formulae. Rather, the Committee exercises its
discretion and makes its judgment after considering the factors described above.
The companies chosen for the comparator group used for compensation
purposes are not the same companies that comprise the peer group index in the
Performance Graph included in this proxy statement. The Committee believes that
the Company's most direct competitors for executive talent are not necessarily
the companies that would be included in a peer group established for comparing
shareholder returns.
The key elements of the Company's executive compensation are base salary,
annual bonuses, and long-term incentives. Each of these is addressed separately
below. In determining compensation, the Committee considers all elements of an
executive's total compensation package, including severance plans, insurance,
and other benefits.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to a company's Chief Executive Officer and its four other most highly
compensated executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. It is the
Committee's objective to maximize deductibility under Section 162(m) with
minimal sacrifices in flexibility and corporate objectives. Accordingly, with
respect to compensation payable to an applicable executive officer that would
otherwise be
10
<PAGE> 14
nondeductible, it is the Company's policy that such amounts be deferred until
the limitation on deductibility no longer applies with respect to such person.
BASE SALARIES
The Committee regularly reviews each executive's base salary. The base
salary ranges of the Company's executives are targeted at approximately the 50th
percentile of the base pay ranges of similarly positioned executives in the
group of comparator companies selected for compensation comparison purposes.
Base salaries for executives are initially determined by evaluating
executives' levels of responsibility, prior experience, breadth of knowledge,
internal equity issues, and external pay practices. Increases to base salaries
are driven primarily by performance, evaluated based on sustained levels of
contribution to the Company.
The factors impacting base salary levels are not independently assigned
specific weights. Rather, the Committee reviews all of the factors, and makes
base pay recommendations that reflect the Committee's analysis of the aggregate
impact of these factors. Overall, executive salaries were increased at rates
comparable to the increases provided at other similarly situated companies and
are near or at market levels.
As reflected in the Summary Compensation Table, Mr. Jorndt's salary was
increased in 2000 by $66,667 (7.5%). In determining Mr. Jorndt's base salary for
2000, the Committee considered the Company's financial performance for the prior
year and over an extended period of time, Mr. Jorndt's individual performance,
his responsibilities as Chief Executive Officer, and his long-term contributions
to the success of the Company. The Committee also compared Mr. Jorndt's base
salary and total compensation to the base salaries and total compensation of
chief executive officers at comparator companies.
ANNUAL BONUSES
The Walgreen Management Incentive Plan (the "Annual Plan") promotes the
Company's pay-for-performance philosophy by providing executives and other
employees with direct financial incentives in the form of annual cash bonuses to
achieve performance goals tied to return on invested capital.
Annual bonus opportunities allow the Company to communicate specific goals
that are of primary importance during the coming year and motivate executives to
achieve these goals. The Annual Plan emphasizes team performance by establishing
a bonus pool covering all plan participants and by maintaining terms that are
consistent for all participants.
Each year, the Committee establishes specific goals, the achievement of
which will determine the funding of the bonus pool. In turn, the size of the
bonus pool will determine the amount of the relative awards to participants.
Accordingly, executives' opportunities to earn bonuses correspond to the degree
to which the preestablished goals are achieved.
Target bonus awards for the named executive officers are established at
levels approximating the 50th percentile of marketplace practices for executive
positions. Actual payouts can rise above or fall below the targeted levels,
depending upon performance relative to the preestablished performance
objectives. In 2000, Mr. Jorndt's bonus represented 57% of his salary. This
resulted in a bonus award under the Annual Plan of $543,115.
LONG-TERM INCENTIVES
Long-term incentives are provided pursuant to the Restricted Performance
Share Plan and the Executive Stock Option Plan.
In keeping with the Company's commitment to provide a total compensation
package that includes at-risk components of pay, the Committee makes annual
decisions regarding appropriate long-term incentive grants for each executive.
When determining these awards, the Committee considers the Company's financial
performance in the prior year, executives' levels of responsibility, prior
experience, historical award data, and compensation practices at comparator
companies. In determining award sizes, the Committee does not assign specific
weights to these factors. Rather, the factors are evaluated on an aggregate
basis.
11
<PAGE> 15
RESTRICTED PERFORMANCE SHARE PLAN: The Plan provides for contingent grants
of restricted Common Stock and restricted cash at the beginning of one-year
performance periods. The participants, the amounts of the grants to each, the
performance requirements for each period, and the restrictions, are determined
by the Compensation Committee.
The performance requirements are annual FIFO earnings goals, subject to a
minimum return on invested capital. The degree to which the goals are met
determines the amount of the contingent grant that is earned, if any. The
restricted Common Stock and restricted cash awards earned for the performance
period ended August 31 of each fiscal year are restricted for a period of four
years, with the restrictions lapsing at the rate of 25% per year.
Based on the achievement of results that exceeded the threshold annual FIFO
earnings goals and met the Company's return on invested capital standard, Mr.
Jorndt was granted 10,726 restricted performance shares and $248,710 restricted
cash for fiscal 2000. Grant levels are established in furtherance of the overall
objectives detailed above and by comparison to similar grants to chief executive
officers at comparator companies.
EXECUTIVE STOCK OPTION PLAN: Stock options are granted periodically to the
Company's executives at the discretion of the Committee to enhance the link
between shareholder value creation and executive pay. Grant levels are
coordinated with those under the Restricted Performance Share Plan, in order to
maintain competitive levels of long-term incentive pay under the Company's
long-term compensation programs.
Stock options are granted at an option price not less than the fair market
value of the Company's Common Stock on the date of grant. Accordingly, stock
options have value only if the stock price appreciates following the date the
options are granted. Further, stock options reflected in the Summary
Compensation Table are subject to a 36-month vesting period. This approach
focuses executives on the creation of shareholder value over the long term and
encourages equity ownership in the Company.
In fiscal 2000, Mr. Jorndt received options to purchase a total of 155,255
shares at the fair market value of shares on the dates of grant. These grants
were established by comparison to 50th percentile long-term incentive grants at
comparator companies. The Committee believes that this equity interest provides
a strong link to the interests of shareholders.
Cordell Reed, Chairman
James J. Howard
John B. Schwemm
OTHER MATTERS
The Audit Committee Report that follows shall not be deemed to be
incorporated by reference into any filing made by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, notwithstanding
any general statement contained in any such filing incorporating this proxy
statement by reference, except to the extent the Company incorporates such
Report by specific reference.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has:
- Reviewed and discussed the audited financial statements with management;
- Discussed with Arthur Andersen LLP, the Company's independent auditor,
the matters required to be discussed by Statement on Auditing Standards
No. 61;
- Received the written disclosures and the letter from Arthur Andersen LLP
required by Independence Standards Board Standard No. 1, and has
discussed with Arthur Andersen LLP its independence.
12
<PAGE> 16
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended August 31, 2000.
John B. Schwemm, Chairman
William C. Foote
David Y. Schwartz
Marilou M. von Ferstel
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following graph compares the five-year cumulative total return of the
Company's Common Stock with the Value Line Drug Store Industry Peer Group and
the S&P 500 Stock Index. The graph assumes a $100 investment made September 1,
1995, and the reinvestment of all dividends.
Line Graph
<TABLE>
<CAPTION>
WALGREEN CO. COMMON PEER GROUP S & P 500
------------------- ---------- ---------
<S> <C> <C> <C>
1995 100.00 100.00 100.00
1996 136.00 129.00 119.00
1997 225.00 199.00 167.00
1998 323.00 278.00 181.00
1999 392.00 288.00 252.00
2000 559.00 313.00 294.00
</TABLE>
<TABLE>
<CAPTION>
DOLLAR VALUE OF INVESTMENT AT AUGUST 31
--------------------------------------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Walgreen Co. Common.................................. $100 $136 $225 $323 $392 $559
Peer Group........................................... $100 $129 $199 $278 $288 $313
S & P 500............................................ $100 $119 $167 $181 $252 $294
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP will serve as the independent auditors for the Company
and its subsidiary corporations for the fiscal year ending August 31, 2001. This
firm has served as the independent auditors for the Company since 1924.
Representatives of the firm are expected to be present at the Annual Meeting to
respond to shareholders' questions and to have the opportunity to make any
statements they consider appropriate.
13
<PAGE> 17
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Shareholders may submit proposals appropriate for shareholder action at the
Company's Annual Meeting consistent with the regulations of the Securities and
Exchange Commission. For proposals to be considered for inclusion in the Proxy
Statement for the 2002 Annual Meeting they must be received by the Company no
later than July 24, 2001. Such proposals should be directed to Walgreen Co.,
Attention: Secretary, 200 Wilmot Road, Deerfield, Illinois 60015.
In addition, the Company's By-Laws establish an advance notice procedure
with regard to certain matters, including shareholder proposals not included in
the Company's proxy statement, to be brought before an Annual Meeting. In
general, notice must be received by the corporate Secretary not less than 90
days or more than 120 days prior to the anniversary of the immediately preceding
Annual Meeting. The notice should contain a brief description of the business
desired to be brought before the Annual Meeting and the reasons for conducting
such business at the Annual Meeting; the name and address, as they appear in the
Company's books, of the shareholder proposing such business; the class and
number of shares of the Company that are beneficially owned by the shareholder;
and any material interest of the shareholder in such business. If the Company
does not receive notice of a shareholder proposal within this time frame, the
individuals named in the proxies solicited by the Company's Board of Directors
for that meeting may exercise discretionary voting power with respect to that
proposal.
By order of the Board of Directors.
Julian A. Oettinger
JULIAN A. OETTINGER
Secretary
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
SOLICITED, AND TO EACH PERSON REPRESENTING THAT AS OF THE RECORD DATE FOR THE
MEETING HE OR SHE WAS A BENEFICIAL OWNER OF SHARES ENTITLED TO BE VOTED AT THE
MEETING, ON WRITTEN REQUEST, A COPY OF THE COMPANY'S 2000 ANNUAL REPORT ON FORM
10-K TO THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO
WALGREEN CO., ATTENTION: MR. MARK A. WAGNER, TREASURER, 200 WILMOT ROAD,
DEERFIELD, ILLINOIS 60015.
14
<PAGE> 18
APPENDIX A
AUDIT COMMITTEE CHARTER
The Board of Directors of Walgreen Co. (the "Company") established an Audit
Committee (the "Committee") to evaluate significant matters relating to the
financial reporting process and system of internal accounting controls of the
Company and to review the scope and results of the annual audits conducted by
the outside auditor. To better define these objectives, the Board of Directors
hereby assigns the authority, responsibility and specific duties of the
Committee as described below.
Composition
The Committee shall be comprised of three or more directors, whose term of
appointment is at the discretion of the Board of Directors, all of whom shall
have no relationship that may interfere with the exercise of their independence
from management and the Company. Each member of the Committee shall be
financially literate, as such qualification is interpreted by the Board of
Directors in its business judgment, or shall become financially literate within
a reasonable period of time after his or her appointment to the Committee. In
accordance with New York Stock Exchange regulations, at least one member of the
Committee shall have accounting or related financial management expertise, as
the Board of Directors interprets such qualification in its business judgment.
One member shall be appointed Committee Chairman by the Chairman of the Board of
Directors.
Authority
The Committee is granted the authority to investigate any activity of the
Company in order to adequately discharge its responsibility, and to expand its
knowledge of Company financial operations. The Committee shall have direct
access to the outside auditor and the General Auditor and any other executive or
manager of the Company.
Meetings
The Committee is to meet at least quarterly or as many times as it deems
necessary.
Attendance
The Chairman may request, in addition to Committee members, that members of
management, the Secretary of the Company, representatives of the outside auditor
and the General Auditor be present at meetings of the Committee.
Minutes
Minutes of each meeting are to be prepared by the Secretary of the Company or
the Chairman's designate and sent to Committee members and the Company directors
who are not Committee members. The Secretary of the Company shall maintain
copies of all minutes as permanent records.
Specific Duties
The Committee shall:
1. Review and reassess the adequacy of this charter at least annually. Upon
amendment, submit the charter to the Board of Directors for approval.
2. Ensure that the charter is published in the proxy statement at least every
three years, as required by the Securities and Exchange Commission.
3. Review with management and the outside auditor, upon completion of their
audit, the audited financial statements for the year. Request that the
outside auditor report on matters required to be communicated to the
Committee in accordance with current auditing standards.
4. Prepare an annual report to be included in the proxy statement, as required
by the Securities and Exchange Commission.
15
<PAGE> 19
5. Engage the outside auditor to complete quarterly reviews in accordance with
current auditing standards. Request that the outside auditor report on
matters, if any, required to be communicated to the Committee in accordance
with current auditing standards, prior to the filing of the Form 10-Q.
6. Review with the outside auditor and the General Auditor their annual audit
plans to determine the combined audit coverage for the Company.
7. Review with the Company's management, the outside auditor and the General
Auditor, the Company's accounting and financial policies and procedures.
8. Discuss with the outside auditor and the General Auditor any relevant
recommendations for the improvement of internal accounting controls, the
selection of accounting policies and the financial reporting process.
9. Recommend to the Board of Directors the retention or nonretention of the
outside auditor. The Committee and the Board of Directors have the ultimate
authority to select, evaluate and, where appropriate, replace the outside
auditor. The outside auditor is ultimately accountable to the Committee and
the Board of Directors.
10. Require the outside auditor to annually summarize audit and nonaudit
service fees and to submit a formal written statement disclosing all
relationships between the outside auditor and the Company in accordance
with current independence rules. The Committee is responsible for actively
engaging in a dialogue with the outside auditor with respect to any
disclosed relationships or services that impact the objectivity and
independence of the outside auditor and for recommending that the Board of
Directors take appropriate action in response to the outside auditor's
report to satisfy itself of the outside auditor's independence.
11. Apprise the Board of Directors, by means of oral reports, distribution of
the minutes of its meetings and special presentations when necessary, of
significant developments relating to the performance of its duties.
12. Recommend to the Board of Directors any appropriate extensions or changes
in the duties of the Committee.
While the Committee has the responsibilities set forth in this charter, it is
not the duty of the Committee to plan or conduct audits or to determine that the
Company's financial statements are complete and accurate and are in accordance
with generally accepted accounting principles which is the responsibility of
management and the outside auditor. Nor is it the duty of the Committee to
conduct investigations, to resolve disagreements, if any, between management and
the outside auditor, or to assure compliance with laws and regulations and the
Company's internal policies.
16
<PAGE> 20
PROXY WALGREENS PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints L. DANIEL JORNDT, JOHN B. SCHWEMM and
CHARLES R. WALGREEN III, or any of them, with full power of substitution, as
attorneys and proxies to vote all shares of common stock which the undersigned
is entitled to vote, with all powers which the undersigned would possess if
personally present, at the Annual Meeting of Shareholders of WALGREEN CO. (and
any adjournment thereof) to be held at the Grand Ballroom of Navy Pier, 600 East
Grand Avenue, Chicago, Illinois, on Wednesday, January 10, 2001, upon the
matters referred to on the reverse side and, in their discretion, upon such
other matters as may properly come before the meeting.
NOMINEES:
L. Daniel Jorndt, David W. Bernauer, William C. Foote, James J. Howard, Alan G.
McNally, Cordell Reed, David Y. Schwartz, John B. Schwemm, Marilou M. von
Ferstel, Charles R. Walgreen III.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
SPECIFIED THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS.
In their discretion, the Proxies are authorized to vote on such other matters as
may properly come before the meeting.
If voted by mail, this proxy must be signed and dated on the reverse side.
Parking is available on the north side
of Navy Pier. Once on the north dock,
please pass the West Parking Garage
and proceed to the EAST PARKING GARAGE,
the garage closest to the Grand Ballroom.
Shareholders should use ENTRANCE 2, NAVY PIER ACCESS MAP
LOBBY 3 for access to the Grand
Ballroom. Please follow posted signs. MAP
If you park in the Navy Pier parking
garage, please pick up a voucher for
$5 parking at our registration desk.
Without the voucher, parking will be
$11.50 or $17.50 depending on the
length of time you are parked.
ADMISSION TICKET TO WALGREENS ANNUAL MEETING OF SHAREHOLDERS
[WALGREENS THE PHARMACY AMERICA TRUSTS LOGO]
This is your Admission Ticket to Walgreens Annual Meeting of Shareholders to be
held Wednesday, January 10, 2001, at 2:00 p.m., Central Standard Time, at the
Grand Ballroom of Navy Pier. A map detailing directions to the meeting site is
shown above. Please present this original ticket for admission. Photocopies will
not be accepted and you may be asked for identification at the time of
admission.
<PAGE> 21
WALGREEN CO.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /*/
<TABLE>
<S><C>
1. Election of Director nominees listed below:
01-L. Daniel Jorndt 02-David W. Bernauer FOR WITHHOLD FOR ALL THE BOARD OF DIRECTORS RECOMMENDS
03-William C. Foote 04-James J. Howard ALL ALL EXCEPT* A VOTE FOR THE DIRECTOR NOMINEES
05-Alan G. McNally 06-Cordell Reed / / / / / / LISTED TO THE LEFT.
07-David Y. Schwartz 08-John B. Schwemm
09-Marilou M. von Ferstel 10-Charles R. Walgreen III
___________________________________________________ The signatory hereby acknowledges
*(Except nominee(s) written above.) receipt of the accompanying Notice
of Annual Meeting of Shareholders
and Proxy Statement.
Dated: ________________
Signature(s) _____________________
__________________________________
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS. JOINT OWNERS SHOULD EACH
SIGN. WHERE APPLICABLE, INDICATE
YOUR OFFICIAL POSITION OR
REPRESENTATION CAPACITY.
</TABLE>
THIS IS YOUR PROXY CARD, FOLD AND DETACH BELOW
CONTROL NUMBER
INSTRUCTIONS FOR VOTING BY TELEPHONE, THE INTERNET OR MAIL
Walgreen Co. encourages you to take advantage of new and convenient ways to
vote your shares for proposals to be covered at the ANNUAL MEETING OF
SHAREHOLDERS. Please take this opportunity to use one of the three voting
methods detailed below to vote your shares. This year, voting has been made
easier than ever.
---> VOTE BY PHONE. Call toll-free at (800) 542-0557 using a touch-tone
telephone to vote 24 hours a day, 7 days a week. Have your proxy card
(above) and social security number in hand when you call. Please enter the
6-digit control number which is located to the left and above, just below
your proxy card.
Option 1 To vote as the Board of Directors recommends, press 1.
Your vote will be confirmed and cast as directed and the
call will end. If you wish to withhold your vote for any
or all individual nominees, press 0.
Option 2 If you selected 0, you will hear these instructions:
To WITHHOLD for all nominees, press 9; to WITHHOLD for AN
INDIVIDUAL nominee, press 0 and enter the two digit number
that appears on the proxy card (above) next to the name of
the nominee you DO NOT wish to vote for. Once you have
completed voting for Directors, press 0.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE DIRECTOR
NOMINEES LISTED ON THE PROXY CARD (ABOVE).
---> VOTE VIA THE INTERNET 24 hours a day, 7 days a week, at:
WWW.COMPUTERSHARE.COM/US/PROXY Have your proxy card (above) and social
security number in hand when you access the web site.
---> VOTE BY MAIL. Please vote, sign, date and return your proxy card
(above) using the enclosed postage-paid envelope.
IF YOU VOTE BY TELEPHONE OR VIA THE INTERNET PLEASE DO NOT MAIL YOUR PROXY CARD.
THANK YOU FOR VOTING
